December, 2023

Issue #2

Edito
The COP28 agreement in December gave a clear signal that the world ismoving away from fossil fuels - but recent bank policies, much like theagreement, have left the door open for the on-going development of fossil
fuels.
In 2023, banks’ oil and gas policies have followed a similar pattern: Crédit
Agricole and Westpac are the latest banks to announce restrictions on theirfinancing dedicated to some oil and gas projects. While the Australian bank’s
policy covers both upstream and midstream projects, Crédit Agricole hasretained the option to finance new fossil fuel infrastructure projects such asliquefied natural gas (LNG) terminals. This loophole is all the more serious as
the French bank is still advising TotalEnergies on the development of Papua
LNG in Papua New Guinea. Like most banks that restrict support for
conventional oil and gas, these banks are only addressing the tip of the iceberg- project finance - and can still finance companies developing new oil and gas
fields or infrastructure.
Westpac has delivered a double strike, also announcing new measures on
coal, specifically addressing a glaring loophole in existing coal policies:
metallurgical coal. With alternatives for steel production finally available, somebanks have committed to stop financing new metallurgical coal mines. Such isthe case with BNP Paribas, which announced a commitment in November, theday before the publication of Reclaim Finance’s Metallurgical coal financing:Time to call it off report. While the French bank has yet to capitalize on this byexcluding companies developing these projects, which unsurprisingly include
Whitehaven Coal and Glencore, this could create a welcome new trend, given
the impact of metallurgical coal on the climate.

Maude Lentilhac, Policy Analyst at Reclaim FinanceNew policies & updates

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Focus on metallurgical coalOver the past few years, financial institutions have adopted policies to restrictfinancing to thermal coal, meaning that thermal coal companies are facing
increasing difficulties in financing new power plants. However, most of thesepolicies contain a major loophole as they do not target metallurgical coal.

What is metallurgical coal?
Metallurgical coal, also called ‘met coal’, refers to coal used for steelmaking, as
opposed to thermal coal which is used for power generation. Metallurgical coalincludes coking coal that is heated to produce coke that is then fed into blast
furnaces but also other kinds of non-coking coal. It represents approximately
14% of total coal production. The extraction of metallurgical coal enables themost carbon-intensive steelmaking technology to continue while releasing an
alarming amount of methane from the mining alone. In order to decarbonize
the steel sector, which accounts for around 7% of global greenhouse gas
emissions and 11% of global CO2 emissions, alternatives to metallurgical coalcan be used, such as hydrogen-based steelmaking.

What should financial institutions do?
In the latest version of its Net Zero by 2050 roadmap, the International Energy
Agency (IEA) shows that no new coal mines or coal mine expansions areneeded, as currently operating metallurgical coal mines will be able to meetdemand until 2050. Financial institutions should therefore stop supporting theexpansion of metallurgical coal mining. Banks and (re)insurers must
immediately make a commitment to end dedicated financing to newmetallurgical coal mining projects and related infrastructure. However,according to research conducted for the report Metallurgical coal financing:Time to call it off, only 1.4% of financing came in the form of direct projectfunding. All financial institutions must also urgently exclude companies withmetallurgical coal expansion plans.

What have they done so far?
Today, only nine of the biggest financial institutions assessed in the Coal Policy
Tracker, have adopted commitments regarding metallurgical coal, according toour updated methodology which now covers met coal. Most policies only
restrict direct financing for metallurgical coal projects and one (SociétéGénérale) excludes some companies deriving revenues from metallurgical coal.
None of the biggest financial institutions directly exclude metallurgical coaldevelopers.

Find out more

Latest news
Crédit Agricole leaves the door
open to financing oil and gasexpansion.
Despite ambitious decarbonization targets,
the French bank has failed to align with
Société Générale or HSBC, which have both
put an end to their direct financing of some
new LNG terminals. Read more

Crédit Agricole’s commitment
tosupporting
theenergytransition remains unclear.
Reclaim Finance has serious reservations
about the sincerity of the steps announced,
and questions whether they are in line withwhat is needed to limit global warming to
1.5°C. Read more

Need some clarification onwhat counts as sustainableenergy?
Read our technology factsheets onbioenergy, energy storage, hydrogenand CCUS in power. Read moreResources

DiscoverDiscoverDiscoverTake action!
Find out more about our recommendations for banks to adopt a robust power
policy.

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